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Fonterra Sneaks Round The Corner – Part 2

Jeanette Fitzsimons writes… Our recent post about Fonterra’s new coal mine seems to have provoked a flurry of denials from Fonterra and Solid Energy. Why so sensitive?Fonterra says their Mangatangi mine is not “on hold” but “deferred”. This is what they told residents at a meeting of the North Waikato community group some weeks ago. As there was no time frame for the deferral we interpreted this as “on hold”. Can anyone illuminate us as to the difference?

They say the mine is deferred because of delays in meeting environmental requirements, though they told the community earlier it was because of low coal prices.

We calculate the mine is now around 17 months behind schedule. It was to have produced coal this year, but not a sod has been turned. Meanwhile, Solid Energy says it is still considering (“doing work on”) whether to reopen the Kopako 1 mine in the Maramarua coalfield about 5km from the Mangatangi site. This seems to be a re-consideration.

They obtained resource consent for this in 2006 from Environment Waikato. Their website recently announced it and carried job recruitment advertisements, but these have since been removed. An announcement was also seen in the local Franklin paper, and their annual report refers to “resuming production from our Maramarua opencast mining area”.

A local resident received a notice in his letterbox in November saying the mine was going to be reopened; machinery has been moved on site and some surface earthworks done but no coal seems to have been removed yet.

We assume this was a firm proposal until the latest round of Solid Energy’s financial disasters, which may have caused a rethink. Solid Energy said in its 2014 annual report that it has renewed contracts with the two largest coal users in NZ, Genesis (which runs the Huntly power station) and NZ Steel.

In addition, it had signed a new contract for over 100,000 tpy with an un-named customer. Only Fonterra uses coal on this scale. The only alternative we can imagine is a very large new industry that nobody seems to have heard of.

While the NBR report on the latest statements from Fonterra and Solid Energysays we “claimed” Fonterra is the third largest coal user in the country, that is not open to dispute. The figures are all published year by year in MBIE’s Energy in New Zealand report (formerly Energy Data File).

Given the current world price of coal, no business in their right mind would start a new mine for export, so there must be a local customer.

Consider this:

Fonterra has only three coal-fired milk drying plants in the North Island, Waitoa, Te Awamutu and Hautapu, all in the Waikato.Together, they use roughly 120,000 tpy. They have been supplied from Fonterra’s subsidiary,

Glencoal‘s Kopako 3 mine which was scheduled to run out at the end of 2014. Fonterra now says it is due to run out in 2017. It is unclear from observation whether it is still producing some coal, but there is not much machinery there.

Mangatangi (over 100,000 tpy) was planned and scaled to replace Kopako 3 and supply those three plants. If Fonterra has a contract with Solid Energy for more than 100,000 tpy those plants cannot use Mangatangi coal as well.

Solid Energy says in its attempted rebuttal that it sells coal from Rotowaro to Fonterra for its milk drying plants. That will be how they are meeting the new contract while they decide about Kopako 1.

Rotowaro produces a little under a million tonnes a year and is also in decline but is clearly capable of supplying Fonterra’s three North Island plants without reopening Kopako 1 if Solid Energy continues to contract its operations.

Whatever they decide, it is not possible for both mines to go ahead and supply Fonterra, which was the point of our original blog. Fonterra has not commented on contracts with Solid Energy but has clearly “sneaked around the corner”.

Why does all this matter? It matters because coal is the biggest contributor world wide to climate change, and most of what is left must stay in the ground if we are to prevent climate chaos. This is the real issue – everything else is obfuscation.

Unlike NZ Steel, which has very limited options, Fonterra has a ready alternative. Wood chips from forestry residues can run boilers for heat, and in many NZ industries they do already. Fonterra has claimed for over a year now that it is actively investigating renewable fuels for its heat plant, but has made no demonstrable progress and has stopped the trials it was doing at Studholme.

Why are these two companies prevaricating and trying to confuse? What we need is some transparency and some honest communication. Footnote: there have been media claims that Coal Action Network Aotearoa is trying to stop coal mining. It is very clear on our website that we are not – we are trying to stop new mines opening so the rest can be phased out as they deplete and miners retire, without the abrupt and deep disruptions in coal mining communities that Solid Energy has caused with its drastic and sudden layoffs.

ends

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